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ABC Analysis & EOQ Optimization

The document discusses ABC analysis and inventory classification. It provides inventory data including item demand, price, dollar value, demand percentage, and value percentage. Based on this data, items 3, 4, and 5 contribute the maximum dollar volume and are classified as Category A. Items 7 and 9 are classified as Category B, and the remaining items are classified as Category C. The document also discusses economic order quantity calculations and workstation layout and efficiency for a production process.

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Aditya Jandial
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88 views5 pages

ABC Analysis & EOQ Optimization

The document discusses ABC analysis and inventory classification. It provides inventory data including item demand, price, dollar value, demand percentage, and value percentage. Based on this data, items 3, 4, and 5 contribute the maximum dollar volume and are classified as Category A. Items 7 and 9 are classified as Category B, and the remaining items are classified as Category C. The document also discusses economic order quantity calculations and workstation layout and efficiency for a production process.

Uploaded by

Aditya Jandial
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 5

Section B

1. Page 4
For ABC analysis, the proportion of inventory and proportion of Inventory KD value
should be computed.

Avg
Item Demand Price Dollar Value Demand % Value % Category

1 700 6.00 4,200 4.64% 2.77% C

2 200 4.00 800 1.32% 0.53% C

3 2,000 12.00 24,000 13.25% 15.84% A

4 1,100 20.00 22,000 7.28% 14.52% A

5 4,000 21.00 84,000 26.49% 55.45% A

6 100 10.00 1,000 0.66% 0.66% C

7 3,000 2.00 6,000 19.87% 3.96% B

8 2,500 1.00 2,500 16.56% 1.65% C

9 500 10.00 5,000 3.31% 3.30% B

10 1,000 2.00 2,000 6.62% 1.32% C

Total 15,100 151,500

Item 3 4 and 5 contribute maximum of the total dollar volume,they would be classified as
Category A,followed by 7 and 9 under Category B and remaining at category C,

Ite Cumulative
m Demand % Value % Inventory Cumulative Value

5 26.49% 55.45% 26.49% 55.45%

3 13.25% 15.84% 39.74% 71.29%

4 7.28% 14.52% 47.02% 85.81%

7 19.87% 3.96% 66.89% 89.77%


9 3.31% 3.30% 70.20% 93.07%

1 4.64% 2.77% 74.83% 95.84%

8 16.56% 1.65% 91.39% 97.49%

10 6.62% 1.32% 98.01% 98.81%

6 0.66% 0.66% 98.68% 99.47%

2 1.32% 0.53% 100.00% 100.00%

The above table represents the cumulative inventory as well as Volume in KD.

2. Page 5
A.

2B
Q4 Page 7

4A
4B.
Total Sec = 8*60*60
Trucks per day = 600
Cycle time = 8*60*60/600 = 48 secs

4C.
No. process time =236
Cycle Time = 48
No. of WS = 236/48 = 4.92 or 5 WS

4D.

WS 1= A & B
WS2 = C & D
WS3 = E F J
WS4 = G H
WS5 = I
WS6 = K

4E. Efficiency = 236/(5*48) = 98.33%


4F= Idle Time = (48*5) -236 = 4 secs

5.
A. EOQ = Srt (2*D*S/H) = Sqrt (2*160*6*52*35/11) = 564 Units
B. No. of orders = D/EOQ = (160*6*52)/32 = 88.5 or 86 times
C.
D. Total cost = 86*35 + 564/2*11 = 6200
E. ROP = 160*5 = 800
F. ROP (Safety stock = 4 days) = 160*9 = 1440

3.

Given D = 200000
S = 300
H = 15%

Assuming Price = 2.35


H = 2.35*15% = 0.3525

EOQ = SQRT (2DS/H) = 18,451. Since this EOQ is more than 9999, at the price of 2.35. The
price assumed is invalid.

Assuming Price = 2.20


H = 2.20*15% = 0.33
EOQ = SQRT (2DS/H) = 19,069. The EOQ is within the range (10,000 - 29,999), at the price of
2.20.

Assuming Price = 2.15


H = 2.15*15% = 0.3225

EOQ = SQRT (2DS/H) = 19,290. The EOQ is lower than the minimum quantity of 30,000, at the
price of 2.15. Thus this price is invalid.

Thus EOQ = 19,069 units.  

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